Let’s be honest: Reading car insurance policies is no fun. After all, an insurance contract is actually a legal contract. Containing a lot of dry jargon, legalese, and jargon typical of the auto insurance industry, it’s not the kind of leisure reading you’d expect on a Saturday afternoon. Still, it’s probably a good idea to take the time to read the policy. Don’t wait until you’re in a car accident. By then it may be too late.
Declaration page: where everything is explained in detail
Like any other insurance contract, your insurance contract begins with a declaration page. This page lists information specific to the policy. The policy number will be shown and important information will be displayed, such as the policy period, coverage limits, and information about the insured person. If you purchase insurance for your car, you will likely be the named insured. In that case, your full name will be displayed on the declaration page. It may also include the names of other drivers in your household if your insurance covers them. It also includes your full legal address, which may be different from the address where the eligible vehicle is primarily stored. The address where your car is stored helps determine your insurance premium, but the legal address is where all insurance communications will be sent.
If you took out a loan to buy a car and still have an outstanding balance, that lender will be listed on your declaration page. Because the lender has a financial interest in your car, you are entitled to a payout under your car insurance policy if your car is damaged, destroyed, or stolen. Therefore, information about the lender must be included on the declaration page.
The declaration page also includes a description of the vehicles covered by the insurance. This description includes each vehicle’s year, make, model, vehicle identification number, and storage address. In addition, the declaration page indicates how each vehicle will be used (e.g. driving to and from school or work, around town, and in some cases for business purposes). Estimated annual mileage may also be displayed on the declaration page. Your insurance premiums are determined in part based on this information about your car and how you use it.
If you choose to purchase one or more endorsements to extend and/or limit your coverage under your policy, these endorsements will be identified by name, form number, and date on the declaration page. For an insurance company to provide specific coverage, there must be an endorsement on that page. Finally, the declaration page shows your annual premium, or the amount you pay your insurance company for insurance coverage. The total premium is the sum of the individual premiums charged for each specific coverage type, plus the limits you select.
If you have questions about this or any other section of your insurance policy, please contact your insurance professional. They can help clarify insurance rules and coverage, and explain any terms you don’t understand.
Another reason to read your insurance policy is your insurance policy.
The general contract section of your auto insurance policy provides that, as explained in more detail below, your insurance company (“we”, “us”, or “us”) agrees to provide you with coverage in exchange for the payment of a premium. This is a rough preamble to the contract. The Definitions section explains words and phrases used throughout the policy (e.g. “covered motor vehicles”).
Department of Insurance Services Personal Auto Insurance Contract Form
The Insurance Services Office’s Personal Auto Insurance Form may be attached to your auto insurance declaration page. This form has six main parts, labeled A through F. His first four parts detail the main types of coverage provided under the policy. The fifth part explains what you must do after an accident or loss. The sixth part clarifies the overall terms and rights that you and the Company have in certain circumstances, including canceling your insurance contract. Parts A to D are “coverage” parts, and parts E and F are “conditions” parts.
• Part A – Liability Coverage: Provides protection against claims brought against the insured if the use of the insured vehicle causes bodily injury or property damage to others.
• Part B – Medical Expenses Coverage: Covers various medical expenses incurred by the insured and others as a result of an accident, regardless of the insured’s fault or liability.
• Part C – Uninsured Motorist Coverage: Covers damages sustained by you and others if you are injured due to the negligence of an uninsured or unknown hit-and-run driver.
• Part D – Coverage for Damage to Motor Vehicles: This provides coverage for losses sustained by the insured as a result of damage to the covered vehicle and/or its contents. This coverage is made up of two parts: collision and non-collision (also known as umbrella). Non-collision damages include fire damage, damage from road animals, and theft.
• Part E – Post-accident or loss obligations: This imposes various requirements on the insured in the event of an accident or other loss. Failure to comply with the obligations set forth in this section may result in the loss of your contractual rights under the Policy.
• Part F – General Terms: This specifies the specific terms and conditions that apply to the insurance contract or to the insurance contract as a whole. These include provisions against fraud, bankruptcy of the insured, cancellation of insurance, etc.
If you choose optional coverage provided by your insurance company, your policy may also include one or all of the following:
• Underinsured motorist insurance – required in some states
• Extended transportation coverage that pays a higher limit than the basic limit when a rental car is used to replace an insured vehicle that is out of service.
• Emergency road service (towing) coverage
important disclosure
Securities and investment advisory services offered through FSC Securities Corporation (FSC), member FINRA/SIPC. FSC is separately owned and other business entities and/or marketing names, products and services referenced herein are independent from FSC.
Working with a CFS designated advisor does not guarantee investment success. Securities and investment advisory services are provided through FSC Securities Corporation, member FINRA/SIPC and registered investment advisor. Grace Financial Group is a marketing designation.
Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, or legal advice. The information contained herein is not specific to any individual’s personal circumstances.
This material is not intended and cannot be used by taxpayers for the purpose of avoiding penalties imposed by law as far as tax matters are concerned. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.
These materials are provided for general information and educational purposes and are based on publicly available information from sources believed to be reliable. We cannot guarantee the accuracy or completeness of these materials. The information in these materials is subject to change at any time without notice.
Grace Financial Group
Marion G. Cuff, CFS®
Founder and Financial Expert
128 Seneca Lake Road Sparta, NJ 07871
973-729-9861
Marion@TheGraceFinancialGroup.com
TheGraceFinancialGroup.com